No Stopping Technocrats as Europe Crisis Brings Down Governments

Mario Monti, the Italian Prime Minister-designate, an academic and former European commissioner, was chosen by the nation’s president after his elected predecessor was abandoned by political allies. Photographer: Alessia Pierdomenico/Bloomberg

Nov. 16 (Bloomberg) -- The European debt crisis has toppled
four elected governments with the last two, in Greece and Italy,
falling last week without a shove from voters.

The appointment of prime ministers in Athens and Rome to
push through unpopular austerity measures echoes efforts in the
past five decades by European leaders to control policy-making
when democratic means fall short.

“The euro zone would never have been created if voters had
been given a say,” Fredrik Erixon, head of the European Centre
for International Political Economy in Brussels, said in a
telephone interview. “It’s an elite project but that doesn’t
mean it’s a bad project.”

Greek Prime Minister Lucas Papademos, a former central
banker, and Italian Prime Minister-designate Mario Monti, an
academic and former European commissioner, were chosen by each
nation’s president after their elected predecessors were
abandoned by political allies, making them unable to pass
legislation demanded by the other members of the euro region.

“They’re there not just because they’re technocrats, but
because it was easier to ask independent personalities to
construct political consensus,” European Commission President
Jose Barroso said Nov. 14 in Paris. “The level of hostility
between different political forces is enormous.”

Progress toward building -- and now saving -- the 27-nation
union has rested largely with the ruling elites. Decisions are
taken at meetings of ministers from national governments, and
the commission, its executive arm, is appointed by those
governments.

Monnet’s Dream

The bloc, the brainchild of French bureaucrat Jean Monnet,
started in 1951 as a grouping of six nations bringing their coal
and steel industries under common management. In 1957, the six
signed the Treaty of Rome, extending cooperation to other
economic areas.

When the prototype European Parliament came into being in
1952, it had no legislative powers. Members weren’t elected
until 1979 and the assembly shuttled between Brussels and
Strasbourg, France. It was only able to amass rights to
influence decisions as new treaties were signed over the years.
In 1999, the parliament exercised its power by forcing the
removal of the commission.

Maastricht Votes

The Maastricht Treaty creating the common currency was
approved by an Irish referendum in June 1992 and narrowly passed
by the French in September 1992. Danes rejected it in June 1992
before endorsing a revised version in May 1993 giving them the
right to opt out of the common currency.

“Monetary union has been a ‘top down’ project dreamed up
by political and business leaders and pushed through without
undue consultation or communication with the people,” said
David Marsh, author of “The Euro: The Battle for the New Global
Currency.”

A proposed European constitution was shelved after French
and Dutch voters rejected it in 2005. Its replacement, the
Treaty of Lisbon, was only put to a popular vote in Ireland,
which initially rejected it in 2008 before approving it in a re-vote the next year.

While the appointments in Greece and Italy avoided snap
elections that may have created even greater turbulence in
financial markets, governments made up of non-political experts
can’t make up for the single currency’s flaws, said Philip
Whyte, a senior research fellow at the Centre for European
Reform in London.

Worse still, they will be forced to pursue austerity
measures that could further depress their economies and drive up
their debt.

‘Deep Flaw’

“There’s a deep flaw in the structure of the common
currency and that’s not something that technocratic governments
can do anything about,” Whyte said. “Monetary union without
fiscal and political union is inherently unstable.”

It has been left to the European Central Bank to maintain
what monetary order remains in the euro area. Nations led by
Germany have refused to consider jointly sold euro bonds, saying
it would infringe on their sovereignty.

The ECB has bought limited amounts of Italian and Spanish
bonds in recent months, without ever firmly stating it stands
behind the debt of both countries. As a condition for the
purchases, it sent a letter to Italian authorities in September
demanding spending cuts, tax increases and labor-market
revamping.

ECB Purchases

And there’s nothing alarming about the ECB dictating
policies to Italy, said Thomas Kleine-Brockhoff, a senior
transatlantic fellow at the German Marshall Fund of the United
States.

“Every day, they are buying Italian debt, which is a
transfer of Italian debt to community debt,” he said.

Greece’s Papademos, a former vice president of the ECB, and
Monti are struggling against pushback from elected officials,
reflecting the squeeze from which they’re not immune.

Greek opposition leader Antonis Samaras said backing for
the country’s new interim government should last no more than
the three months needed to secure international financing before
elections are held or risk a “social explosion.”

Monti yesterday moved to finish cobbling together his
government after two days of talks that threatened to unravel
amid political posturing.

“In parliamentary democracies, you can’t impose an
alien,” Kleine-Brockhoff said. “They still have to get
parliamentary majorities to move things.”